PUC outlines rules for ride-sharing firms

Permits, driver training, more insurance proposed

App-based ride service Lyft and rival Uber will charge passengers much higher rates than usual to attract more drivers to meet the heavy demand on New Year’s Eve, while come taxi drivers will charge a much lower flat rate in San Francisco. less

App-based ride service Lyft and rival Uber will charge passengers much higher rates than usual to attract more drivers to meet the heavy demand on New Year’s Eve, while come taxi drivers will charge a much ... more

Photo: Paul Chinn / The Chronicle

Photo: Paul Chinn / The Chronicle

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App-based ride service Lyft and rival Uber will charge passengers much higher rates than usual to attract more drivers to meet the heavy demand on New Year’s Eve, while come taxi drivers will charge a much lower flat rate in San Francisco. less

App-based ride service Lyft and rival Uber will charge passengers much higher rates than usual to attract more drivers to meet the heavy demand on New Year’s Eve, while come taxi drivers will charge a much ... more

Photo: Paul Chinn / The Chronicle

PUC outlines rules for ride-sharing firms

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The new wave of online-enabled ride- and car-sharing services that threaten to disrupt the taxi and limousine industries should be regulated, but in a way that doesn't stifle innovation, the state Public Utilities Commission said Tuesday.

The commission proposed rules that would force companies like Lyft, Uber and SideCar to obtain state permits to operate legally. And they would have to carry insurance coverage that exceeds what's now required of limousines, establish driver training and criminal background checks, and have zero-tolerance drug and alcohol policies.

Sunil Paul, SideCar's chief executive officer, said he is happy with the decision, saying the commission "has come down on the side of safety and innovation."

Lyft CEO John Zimmer was still reading through the 59-page document when reached for comment, but said he is pleased that the commission focused on safety regulations. "The list is exhaustive, which I think is good," he said.

The proposed rules, which could become final Sept. 5, come after months of public hearings and community debate.

Ride-sharing services have been a hot topic in major cities. San Francisco, especially, has been a crucible, since most of the companies have their origins in the Bay Area. Many feel they provide an alternative to San Francisco taxi service.

Cab and limousine drivers asked the commission to step in, saying these new unregulated "sharing economy" companies threatened their livelihoods by undercutting their rates and taking their passengers away. San Francisco taxi drivers rallied outside City Hall on Tuesday to protest their high-tech competitors.

Arrests at SFO

The battle has also escalated at San Francisco International Airport, where officials have recently made citizen's arrests and issued citations to private ride-share drivers who pick up or drop off passengers. Eleven drivers have been arrested on suspicion of unlawful trespassing, a misdemeanor, since July 10, airport spokesman Doug Yakel said.

But the startups, which operate under different business models, but generally employ online and mobile methods to arrange car and ride sharing - argue that existing regulations are outdated and in some cases don't apply to them.

The proposal would create a category called a "transportation network company," which would fall under different rules than those that have long governed cabs and limos. Such a company is defined as one that provides transportation services "using an online-enabled platform to connect passengers with drivers using their personal, non-commercial, vehicles."

Public safety concerns

"The commission is aware that (transportation network companies) are a nascent industry," said the proposal from commission President Michael Peevey. "Innovation does not, however, alter the Commission's obligation to protect public safety, especially where, as here, the core service being provided - passenger transportation on public roadways - has potential safety impacts for third parties and property."

However, the new distinction might already be blurred, since many taxi services also offer apps to summon cars.

Notably, the commission said it would not force ride-sharing services to designate drivers as employees or contractors.

"Again, our role is to protect public safety, not to dictate the business models of these companies," the proposal said.

To varying degrees, the ride-share companies already are operating under the proposed regulations. The commission was unable to put the brakes on the tech companies last year with cease-and-desist orders and $20,000 fines. But it reached temporary settlements with Uber, Lyft and SideCar, which agreed to operate under many of the same proposed safety rules while the commission reviewed its regulations.

Under the proposed rules, however, each company must submit a driver training program for review. Zimmer says Lyft already has a program to give drivers tips on safe driving, but it's unclear whether the new rules will require more.

In a blog post, Uber, which also offers service in Los Angeles, San Diego and Sacramento, hailed the proposal.

"Uber's technology ensures that consumers have access to a range of superior transportation options that improve driver opportunity and boost the economy of the state," the company said. "We are pleased that the (commission's) proposed decision seeks to do the same."